Correlation Between Citigroup and Dah Sing

Can any of the company-specific risk be diversified away by investing in both Citigroup and Dah Sing at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citigroup and Dah Sing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Dah Sing Financial, you can compare the effects of market volatilities on Citigroup and Dah Sing and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citigroup with a short position of Dah Sing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Dah Sing.

Diversification Opportunities for Citigroup and Dah Sing

0.46

Correlation Coefficient

Citigroup  Dah Sing

Very weak diversification

The 3 months correlation between Citigroup and Dah is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Dah Sing Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dah Sing Financial and Citigroup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citigroup are associated (or correlated) with Dah Sing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dah Sing Financial has no effect on the direction of Citigroup i.e., Citigroup and Dah Sing go up and down completely randomly.

Pair Corralation between Citigroup and Dah Sing

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.16 times more return on investment than Dah Sing. However, Citigroup is 1.16 times more volatile than Dah Sing Financial. It trades about 0.17 of its potential returns per unit of risk. Dah Sing Financial is currently generating about 0.15 per unit of risk. If you would invest  5,877  in Citigroup on September 17, 2024 and sell it today you would earn a total of  1,224  from holding Citigroup or generate 20.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Dah Sing Financial

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dah Sing Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dah Sing Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dah Sing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Dah Sing

The main advantage of trading using opposite Citigroup and Dah Sing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Dah Sing can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dah Sing will offset losses from the drop in Dah Sing's long position.

The idea behind Citigroup and Dah Sing Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.